U.S. corn futures are expected to open higher Tuesday, rebounding on deteriorating crop conditions and easing concerns about Europe's debt crisis.
Traders expect corn to open 6 to 8 cents higher. In overnight trade, corn for July delivery at the Chicago Board of Trade was up 7 3/4 cents, or 1.4%, to $6.68 1/2 per bushel. December corn was up 7 1/4 cents to $6.34.
After tumbling 19% from a fresh all-time high earlier in the month, a weekly crop update could halt the descent, at least temporarily. The U.S. Department of Agriculture reported Monday afternoon that the portion of the crop rated good or excellent slipped to 68%, down from 70% the prior week. Traders were expecting the rating to hold steady or increase as much as two percentage points.
The decline was seen as a sign that crops in some areas are being hurt by excessive rains. Conditions fell in Illinois, Iowa and Minnesota, all key corn producing states.
Meanwhile, "ratings (are) not likely to improve next week after another round of heavy rains pounded areas of the Midwest yesterday," MF Global Broker Doug Bergman said in a note to clients.
Analysts say the U.S. must produce a very strong crop to replenish supplies that are historically tight, and expected to stay that way for months to come. While many traders have seen the weather as benign for the crop generally, flooding along the Missouri River and elsewhere is expected to hurt production. Cargill Inc. Chief Executive Greg Page estimates some 2.5 million acres of corn have been lost as a result of heavy rains and flooding in the U.S., the Financial Times reported on its website Monday.
Prices Tuesday could also be supported by outside markets, as worries about the debt crisis in Europe ease, analysts said, pressuring the dollar and lending support to commodities generally.
In export news, the Korea Feed Association has purchased 55,000 metric tons of optional-origin corn from Noble Resources at $339.99/ton, cost and freight, for arrival by Oct. 15, trading executives said Tuesday.
Despite the overnight gains, the market remains in a downward trend, analysts said, and many expect that the June high of $7.99 3/4 per bushel will hold for the foreseeable future.
"After recent bouts of selling and risk reduction, sentiment remains vulnerable," Barclays Capital said in a report.
Traders are looking ahead to Thursday reports from the USDA and planted acreage and corn stockpiles as of June 1. The reports, along with weather forecasts, will likely guide the market's direction throughout the summer, traders said.